Venture creation in the aftermath of COVID-19: The impact of US governor party affiliation and discretion

Abstract

In the USA, governors became central figures in the fight against the novel coronavirus. In many cases, state leaders were forced to choose between preserving life and protecting economic livelihood. While prior research has underscored the important role that US governors played in implementing healthcare policies at the onset of the COVID-19 pandemic, we know little about how characteristics of state leaders impacted self-employment. In this paper, we draw from upper echelons theory to examine how governor party and discretion impacted venture creation in the food and restaurant industry. Interestingly, we find no significant relationship between governor party and venture creation. However, we find that when the governor and legislature were unified in their political party — irrespective of party line — there were a higher number of new food and restaurant ventures created. We also found this effect to be strengthened when small business unemployment levels were higher. We explore the implications of these results for how unity of command may be beneficial during times of crisis.